India's gems and jewellery sector are one of the largest in the world contributing 29 per cent to the global jewellery consumption. The market size of the sector is about Rs 5,24,175 crore (US$ 75 billion) as of 2018 and is estimated to reach Rs 6,98,900 crore (US$ 100 billion) by 2025. The sector is home to more than 300,000 gems and jewellery players, contributes about 7 per cent to India’s Gross Domestic Product (GDP) and employs over 4.64 million employees.
India's gems and jewellery sector contributes about 15 per cent to India’s total merchandise exports. The overall net exports of gems and jewellery stood at R. 67,793.3 crore (US$ 9.70 billion) in FY20P (April’19-July’19) registering a compound annual growth rate (CAGR) of 4.99 per cent over FY05; whereas gems and jewellery overall imports is about 3 per cent, in terms of value Rs 2,29,239.2 crore (US$ 32.8 billion) in FY19 and increased at a CAGR of 7.97 per cent from Rs 81,282.07 crore (US$ 11.63 billion) in FY05 to Rs 2,20,293.28 crore (US$ 31.52 billion) in FY18.
India is the world’s largest centre for cut and polished diamonds in the world and exports 75 per cent of the world’s polished diamonds. Today, 14 out of 15 diamonds sold in the world are either polished or cut in India. India exported Rs 24,601.28 crore (US$ 3.52 billion) worth of cut and polished diamonds in FY20P (as of May 19 provisional). It contributed 73.42 per cent of the total gems and jewellery exports.
India is the largest consumer of gold in the world. Rising middle class population and increasing income levels are the key drivers for the demand of gold and other jewellery in India. India’s demand for gold jewellery hit a four-year high in Q1CY19 at 125.4 tonnes. In first quarter, 35 per cent India’s gold import in current fiscal from the last year to Rs 80,024.05 crore (US$ 11.45 billion). Gold demand in India rose 11 per cent year-on-year to 760.40 tonnes during January-December 2018. Also, the Government of India has permitted 100 per cent Foreign Direct Investment (FDI) in the sector under the automatic route. The Rs 250,000 crore (US$ 35.77 billion) household jewellery industry is probably going to get a major lift through the government’s decision for foreign direct investment (FDI) in retail. As of January 2018, the Reserve Bank of India (RBI) has increased the scope of the gold-monetisation scheme by allowing charitable institutions and government entities to deposit gold, which is expected to boost deposits over the coming months. The Bureau of Indian Standards (BIS) has revised the standard on gold hallmarking in India from January 2018, to include a BIS mark, purity in carat and fitness as well as the unit’s identification and the jeweller’s identification mark on gold jewellery. The move is aimed at ensuring a quality check on gold jewellery.As per Union Budget 2019-20, the GST rate has been reduced from 18 per cent to 5 per cent (*5 per cent without Input Tax Credit (ITC)) for services by way of job work in relation to gems and jewellery, leather goods, textiles etc.